What happens when I fail to make a payment in a Chapter 11 bankruptcy?

When a debtor fails to make a payment in a Chapter 11 bankruptcy in California, the trustee appointed to the case may take action to collect the unpaid debt. The trustee may attempt to collect the debt by negotiating with the debtor and their creditors, or they may file a motion with the court to request that the court order a repayment plan. If the debtor is unable to make their payments as outlined in the repayment plan, the trustee may take more extreme measures to collect the debt. This could involve the appointment of a receiver to take over the debtor’s affairs, or the payment of the debt out of a debtor’s assets. The trustee may also file a motion with the court to convert the Chapter 11 case into a Chapter 7, or liquidation bankruptcy, which can lead to the sale of the debtor’s assets in order to pay off their creditors. Finally, in extreme cases, the trustee may even recommend to the court that a debtor’s discharge be denied, which means that the debtor would remain liable for their debt even after the bankruptcy is completed. This could potentially result in the enforcement of a garnishment, lien, or levy against the debtor. It is therefore important for debtors in California who are attempting to file for Chapter 11 bankruptcy to remain diligent in making their payments and to adhere to the repayment plan laid out by the trustee. Failing to do so could result in more serious consequences.

Related FAQs

What happens when I fail to make a payment in a Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts